Principle 3: Customer Perception of Value (Item 8)
Providing what your customers value – now and in the future –
must be a key influence in your organization's direction, strategy and
action.
We must build a relationship of trust with your customers. For example,
you must keep your promises, do not over-promise or promise to do what
you cannot do.
Businesses have come to realize that although features and benefits
may be important, they are often more important to the company than
to the customer. Often the "relationship" between customer
and supplier is of primary importance to the customer – and this
can provide significant competitive advantage.
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Addressing the human need for trust and credibility
is part of your product and service.
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Relationships are formed between people. As we described in the Principle
1 (`Role Models'), trust and keeping promises are crucial in
all relationships between people. Customers clearly value trust in the
relationship. The surest way to harm a relationship is to break your
promises and so damage "trust". This means you can build on-going
relationships by keeping your promises and building trust.
You can do this in two main ways
- do not over promise, i.e. do not promise what you cannot deliver
- when there is even a hint of failure to deliver, move heaven
and earth to deliver – even if it is not your fault. Your customers
will remember that you went completely out of your way to solve their
problems.
When customers think that they get value for money, there is a chance
they will be repeat buyers. If your product appears like a commodity
(i.e. nothing to distinguish it from the rest – like gas, petrol),
and there is no relationship, then why wouldn't your `buyers' shop around
for the lowest price. If you do not take the trouble to establish a
relationship of trust, there is no reason for the `customer' to stay
loyal to you.
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You need to offer a sustainable relationship
to your customers as part of your products and services.
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There has been a lot written about the value to you of getting your
customers to keep coming back to buy from you – it is more expensive
to get new customers.
Let us look at this from a few perspectives. First, the majority of
organizations behave as though this were not true. Most spend money
on advertising (attracting new customers with promises) but little on
making certain their products and services are of value to their customers
(or live up to the promises).
Second, much of the activity aimed at making sure customers are `loyal'
or `advocates' appears very shallow – slogans only, rather than
being backed by plans and changing processes to address Principle 3.
Slogans also imply a promise. If the promise of the slogan is not delivered,
it leads to lack of trust and a broken customer relationship.
You get loyal customers, positive referrals and customer advocacy when
you keep your promises, including those in advertising. Make certain
your products and services live up to the promises you make about them.
The concept of designing the business for to provide what your customer's
value can be extended beyond the direct customer to all stakeholders
(i.e., owner, employees, suppliers, alliance partners, community). Although
the customer is the primary receiver of the core products and services,
each stakeholder can be considered as a "customer" for their
particular component of what they receive from the company. To some
extent, the organization must be organized around providing maximum
value to each stakeholder group. In Principle 10 ('Value for All Stakeholders'),
we shall examine how the organization must find a balance – acceptable
to the stakeholders – between those competing needs.
The importance of each stakeholder is different for every business.
Small businesses will be mainly concerned with customers, suppliers
and employees. As the business grows, it will become increasingly involved
with more stakeholders and their concerns. Large organizations should
have strategies and goals for each stakeholder, recognizing each of
them as customers for what they receive from the company.
Business magazines are always peppered with articles about organizations
that suddenly discover they have customers and begin to organize themselves
to meet those customers' needs. We continue to be amazed – not
at the stories, they are mostly the same – but that the discoveries
are treated as being new. What we are seeing are people looking out
and noticing the earth is round, i.e. discovering the Business Excellence
Principles.
A few years ago, the Bells bought a gas space heater. They chose it
because of the features it offered and it was Australian made. It was
delivered on the wrong day; it was not installed as promised but dumped
at the front door; and the instruction booklet was incomprehensible.
After many phone calls, someone arrived to install it. It did not work
and had to be taken apart and reassembled (manufactured) on their lounge
room floor. The company's manufacturing process was so poor, it had
to employ someone full time to travel around Sydney completing the manufacturing
process in customer's homes. The Bells rang to complain and were told
very rudely that they could like it or lump it. They had bought their
gas heater from a company that had not heard of customers or the Principles
of Business Excellence. The heater has given trouble ever since.
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